PRESS RELEASE
For Immediate Distribution

U.S. Department of Justice Files Case to Seize Over $23 Million in Manhattan Real Estate Connected to Magnitsky Case
10 September 2013 – The United States Attorney’s Office in New York has filed a complaint to seize over $23 million in Manhattan property linked to the $230 million theft uncovered by Hermitage Fund’s Russian lawyer Sergei Magnitsky. The U.S. Attorney’s complaint seeks to further seize cash in connected bank accounts and impose civil money laundering penalties, according to documents filed today with the Manhattan Federal Court.

“This is the first action in the US  to seize assets connected to the Magnitsky case, – said a Hermitage Capital representative. – It is a significant escalation in the campaign to bring justice for Sergei Magnitsky and his family. Sergei’s friends, colleagues and family will continue to pursue all the recipients of the blood money to make sure they are parted with the illicit proceeds, whoever and wherever they are.”

The complaint was filed by Preet Bharara, United States Attorney’s Office for the Southern District of New York, on behalf of the United States Government, who is plaintiff in the action. According to the filing, the U.S. Government’s claims over the real estate and cash in New York arise out of the laundering of proceeds of a criminal enterprise in Russia.

“A Russian criminal organisation including corrupt Russian government officials defrauded Russian taxpayers of approximately 5.4 billion rubles, or US$230 million, through an elaborate tax refund fraud scheme,” says the complaint.

“In order to procure the refunds, the Organization fraudulently re-registered the Hermitage Companies in the names of members of the Organization, and then orchestrated sham lawsuits against these companies,”
says the complaint.
“These sham lawsuits involved members of the Organization as both the plaintiffs (representing sham commercial counterparties suing the Hermitage
Companies) and the defendants (purporting to represent the Hermitage Companies,” says the complaint.

“After perpetrating this fraud, members of the Organization have undertaken illegal actions in order to conceal this fraud and retaliate against individuals who attempted to expose it. As a result of these retaliatory actions, Sergei Magnitsky, a Russian attorney who exposed the fraud scheme, was falsely arrested and died in pretrial detention,” says the complaint.

“Members of the Organization, and associates of those members, have also engaged in a broad pattern of money laundering in order to conceal the proceeds of the fraud scheme. This money laundering activity has included the purchase of pieces of Manhattan real estate with funds comingled with the fraud proceeds,” says the complaint.

“The $230 Million Fraud Scheme is strikingly similar to what appears to have been a fraud scheme carried out by the Organization in 2006 involving two subsidiaries of Rengaz,” says the complaint.

A portion of the stolen $230 million funds were laundered through several shell companies into Prevezon Holdings Ltd., based in Cyprus, according to the court filing. The court documents indicate that two Russian nationals were registered as shareholders of Prevezon, including Timofey Krit (during the period from 29 August 2006 to 18 June 2008) and Denis Katsyv, the son of a former Moscow regional government official (since 19 June 2008).
Prevezon’s bank account was owned by Alexander Litvak, named as a business partner of Katsyv in the filing.
According to the court documents, the payments traced by the U.S.
Department of Justice to Prevezon came from two Moldovan shell companies, Elenast and Bunicon-Impex which held accounts at Banca de Economii, which in turn received funds originating from the $230 million from the Russian treasury from Krainiy Sever, a Russian bank whose license was removed for violations of anti-money laundering regulations.

According to the court filing, the stated purpose of payment to Prevezon from Bunicon was “pre-payment for sanitary equipment”. However, this description was at odds with an explanation provided subsequently by a PR representative of Mr Katsyv who explained the transfers as derived from a deal between Mr Krit, a previous shareholder of Prevezon, and his friend, Mr Petrov, who “agreed jointly to develop a business based on investments in and management of property. Under the agreement Mr Petrov was to transfer funds to Prevezon for this purpose.” According to Mr Katsyv’s representative, funds from Bunicon and Elenast were accepted by Prevezon because Mr Petrov was “anticipating repayment through these companies of a debt owed him by a third party, Mr Kim.”

Some of the information identifying the flow of illicit funds came from whistleblower Alexander Perepilichnyy who died mysteriously at the age of
44 in Surrey, UK, in November last year. The cause of his death remains unexplained. As a result of the information he provided, five countries in Europe have now opened criminal investigations, with some freezing funds traced to the proceeds from the $230 million fraud uncovered by Sergei Magnitsky.
Sergei Magnitsky testified about the criminal conspiracy to Russian authorities in 2008, was arrested by some of the same officials he had implicated, ill-treated and tortured for nearly a year and killed in Russian state custody on 16 November 2009.

The investigation for this filing in New York was carried out by the Office of Homeland Security Investigations Division and supported by New York County District Attorney.

For further information, please see:

Law and Order in Russia

Press Release
For Immediate Distribution

4 September 2013 – Today, the Legal Affairs and Human Rights Committee of the Parliamentary Assembly of the Council of Europe has approved the reportentitled “Refusing Impunity for the Killers of Sergei Magnitsky” (http://www.assembly.coe.int/Communication/20130904_ImpunityMagnitsky_EN.pdf). The report and a draft Resolution prepared by Rapporteur Andreas Gross, Swiss MP and member of the Socialist Group, were approved by all Committee members, except for 6.

At the previous Committee meeting on 25 June 2013 when the draft Magnitsky report was first released, the Committee agreed to give the Russian delegation more time and postponed the vote on the report until today’s meeting. Rapporteur Andreas Gross indicated that the information provided by the Russian officials during summer only confirmed his findings presented in June 2013 of a “massive cover-up” of the crime within the Russian government.

“My initial conclusion, namely that we are in the presence of a massive cover-up […], finds itself further consolidated,” said Rapporteur Gross in the addendum to the Report discussed by the Committee today.

The draft Resolution “Refusing Impunity for the Killers of Sergei Magnitsky” is expected to be debated at the plenary session of the Parliamentary Assembly of the Council of Europe in January 2014.

The draft Resolution urges, in particular, to “close the posthumous trial against Mr Magnitsky and cease putting pressure on his mother and his widow to participate in these proceedings.”

The draft Resolution highlights the fact that in addition to the posthumous attack on Mr Magnitsky, other lawyers defending Hermitage against the same fraud Magnitsky had uncovered, remain under attack with criminal proceedings, and calls “to cease the persecution of other lawyers acting for the true owners of the fraudulently reregistered companies.”

The draft Resolution highlights how Sergei Magnitsky was beaten before his death and denied medical care, and calls to investigate the “possible criminal responsibility of all officials” and “hold to account for their acts and omissions all those who share in the responsibility for Mr Magnitsky’s death, in particular those who ordered his frequent moves between prisons and cells, with ever-deteriorating conditions of detention, failure to provide necessary medical treatment, and, just before his death at Matrosskaya Tishina prison, the beatings and the manner in which Mr Magnitsky was left alone in a cell in apparently critical condition.”

Addendum to the Report “Refusing Impunity for the Killers of Sergei Magnitsky”:

http://www.assembly.coe.int/Communication/20130904_ImpunityMagnitskyAdd_EN.pdf

See a press release by the PACE on the adoption of the “Refusing Impunity for the Killers of Sergei Magnitsky” report:

http://www.assembly.coe.int/ASP/NewsManager/EMB_NewsManagerView.asp?ID=8995

For further information, please see:

Law and Order in Russia

 

PRESS RELEASE

For Immediate Distribution

2 September 2013 – This Wednesday, 4 September 2013, between 9 am and 1 pm, the Committee on Legal Affairs and Human Rights of the Parliamentary Assembly of the Council of Europe (PACE), will consider a draft resolution entitled “Refusing Impunity for the Killers of Sergei Magnitsky”(http://www.assembly.coe.int/Communication/ajdoc24_2013.pdf).

Since the report’s publication earlier in June, Russian officials have been struggling to find ways of diluting the conclusions of the report.

Russia is one of the 47 member states of the Council of Europe. The draft resolution and the report on the impunity of Russian officials in the Magnitsky case have been prepared by Swiss MP, Rapporteur Andreas Gross under his Council of Europe mandate from November 2012 to carry out an independent review of Magnitsky’s death in Russian custody.

On 25 June 2013, Mr Gross presented his findings to the Legal Affairs and Human Rights Committee of the Council of Europe. Even before the report was released, the Russian delegation expressed its dissatisfaction and pledged to “influence” the content of the report before the 4 September 2013 vote.

Alexei Pushkov, MP from the Pro-Putin United Russia and head of the Russian delegation to the Council of Europe,(http://assembly.coe.int/ASP/AssemblyList/AL_MemberDetails.asp?MemberID=6889), said prior to the 25 June 2013 meeting on the draftMagnitsky resolution:

“We will try to influence its content. The first page of the resolution announces Magnitsky as a fighter with corruption which he never was, because he was a finansist, specialist in creating schemes to avoid taxes”(http://www.er-duma.ru/news/59702).

Pushkov also said that the draft report presented to the Council of Europe’s Committee by Mr Gross “repeated the political imprints which have been accepted by the Western approach to the ‘Magnitsky case.”

Pushkov denied that Magnitsky died from beating, saying: “I repeat. This has not been determined.”

After these remarks were made, Mr Magnitsky’s mother publicly confronted Mr Pushkov with a statement that she and other relatives were eyewitnesses to the injuries her son had suffered before his death.

“The statements you have made have offended the feelings of Sergei Magnitsky’s relatives, who had the misfortune to witness first hand the injuries on his body pointing towards a violent death,” said Mrs Magnitskaya in a letter addressed to Mr Pushkov.

Mr Magnitsky’s mother demanded a public apology from Mr Pushkov over his remarks: “You have made statements over a long period of time about a deceased person, which are impermissible both from the point of view of the morality and law. In spite of this, you have never asked for the clarification of the position from the family of Sergei Magnitsky,” said Mrs Magnitskaya.

 

Natalia Magnitskaya’s letter was published by Novaya Gazeta (http://www.novayagazeta.ru/news/66840.html). No response from Mr Pushkov was forthcoming so far.

 

Another Russian delegate to the Council of Europe, Alexander Sidyakin (http://assembly.coe.int/ASP/AssemblyList/AL_MemberDetails.asp?MemberID=6899) said  the report by Rapporteur Gross was “not accounting for the position of the official structures of Russia” and implied that the death of Mr Magnitsky was similar to the death of the former Serbian President Mr  Milošević.

“Our objection is that the report is biased. We proposed to them [PACE Committee] to examine the death of the particular person in detention, but this is a banal topic. Milošević also died in detention, because help was not provided to him,” said Mr Sidyakin in comments published bygazeta.ru on 26 June 2013 (http://www.gazeta.ru/politics/2013/06/26_a_5394273.shtml).

 

Notably, when Andreas Gross MP was first appointed as Rapporteur on the Magntisky case, the Russian officials welcomed his candidacy. According to comments made in November 2012 by the Russian delegate to the Council of Europe, Leonid Slutsky MP (http://assembly.coe.int/ASP/AssemblyList/AL_MemberDetails.asp?MemberID=4380), “Gross was one of the co-rapporteurs on the monitoring file on the Russian Federation and had shown himself as a constructive partner” and his appointment would help avoid an “openly biased approach” (http://www.rbc.ru/rbcfreenews/20121112184851.shtml).

 

The motion “Refusing Impunity for the Killers of Sergei Magnitsky” calling for an independent review of the Magnitsky case by the Council of Europe was tasked to the Committee on Legal Affairs and Human Rights in October 2012 following a recommendation of the Council of Europe’s Bureau. At the meeting on 12 November 2012, the Legal Affairs and Human Rights Committee designated Mr Gross to prepare a report on the Magnitsky case.

 

The draft resolution before the Committee’s vote on 4 September 2013 prepared by Rapporteur Gross on the impunity of officials in the Magnitsky case calls for the Council of Europe member states to hold to account all those who share responsibility in Mr Magnitsky’s death, ensure that his posthumous prosecution and the persecution of other lawyers who represented Hermitage in Russia is ended, and urges Russian authorities to cooperate with criminal investigations launched by European countries into the $230 million funds stolen by the group of Russian officials and criminals exposed by Sergei Magnitsky.

 

The draft resolution summarises the details of the corrupt criminal conspiracy exposed by Mr Magnitsky (see, for instance, Mr Magnitsky’s testimonies from 5 June 2008 and 7 October 2008 given before his arrest, his testimonies from detention from 14 October 2009 and 12 November 2009 at http://russian-untouchables.com/eng/testimonies/). In spite of the evidence, the Russian authorities attempt to argue that Mr Magnitsky did not discover their corruption, and instead posthumously blamed Mr Magnitsky himself for the $230 million theft he had exposed.

The draft resolution before the Council of Europe’s Committee describes Mr Magnitsky’s beating before his death (see the prison records evidencing the use of hand-cuffs and rubber batons, the signs of violence on Magnitsky’s body discovered at the funeral, the act of death referring to his suspected head injury, and the findings by the Russian President’s Human Rights Council in: http://russian-untouchables.com/eng/cover-up-presentation/).

Even the official Russian medical experts referred to rubber batons as a likely cause of injuries on Magnitsky’s body, yet the official position of the Russian government remains that of denial that beatings took place. In March 2013, the Russian Investigative Committee formally closed the investigation into the death of Sergei Magnitsky finding that “no event of crime” had occurred. In April 2013, President Vladimir Putin’s spokesman Dmitry Peskov stated that the Kremlin had “no reason to doubt the competency of those who conducted the investigation”(http://www.interfax.ru/russia/news.asp?id=301437). Mr Peskov insisted that the Magnitsky case must not be discussed outside of Russia, calling such discussions “impermissible” (http://www.bbc.co.uk/russian/russia/2013/04/130415_peskov_interview.shtml).

The official agenda of the 4 September 2013 meeting of the Committee on Legal Affairs and Human Rights which will take place in Paris, France, includes the consideration of the draft report on the impunity in the Magnitsky case, the addendum and the draft resolution (http://assembly.coe.int/Committee/Agenda/20130904JUR3932_E.PDF).

For further information, please see:

Law and Order in Russia